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Last Updated : Mar 16, 2020 05:38 PM IST | Source: Moneycontrol.com

All eyes on SBI Card IPO debut; will weak sentiment hit the listing?

With equities falling for three-weeks on the trot, market participants do not see a blockbuster listing on March 16


The listing of SBI Cards and Payment Services, a subsidiary of country's largest lender State Bank of India, may be impacted by the dampened market sentiment surrounding the spread of the novel coronavirus or COVID-19.

Earlier this week, the World Health Organisation (WHO) declared COVID-19 as a pandemic after the virus spread across 124 countries. Globally, over 1.3 lakh people have been infected, with over 5,000 fatalities — majority of them in China. On March 13, US President Donald Trump declared coronavirus a US national emergency.

With equities falling for three-weeks on the trot, market participants do not see a blockbuster listing on March 16.

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Its grey market premium too has fallen quite sharply to around Rs 50 from Rs 350-380 levels seen before the issued opened on March 2. In fact, the counter is trading at a discount to its grey market premium as buyers stayed away given the global market turmoil surrounding the spread of the coronavirus.

This is in sharp contrast to the scene prior to the issue opening for subscription. At that time, the grey market showed the counter listing at a premium of Rs 350-380 per share as against its issue price of Rs 755.

Its subscription was also impacted as the Rs 10,340-crore public issue was subscribed 26.54 times during March 2-5, much lower than analysts' expectations.

So, that brings up back to the moot question: will SBI Card list at a premium or discount?

Several analysts that Moneycontrol spoke to said that if the sharp recovery (from the 10 percent lower circuit levels) seen on March 13 continued on March 16, it could list at a maximum premium of 10 percent over its issue price of Rs 755 per share. However, they warned that if the market continued to correct then it could list at a discount.

Analysts like Jaikishan Parmar of Angel Broking also cited the Yes Bank crisis as one of the reasons that could shrink its listing premium.

Given the current market scenario and shrinking grey market premium, Manali Bhatia, Senior Research Analyst at Rudra Shares & Stock Brokers, expects a muted listing (around 8-10 percent). However, she does not rule out the possibility of a higher listing if the market recovers further.

But Nirali Shah, Senior Research Analyst at Samco Securities, and Prashanth Tapse, AVP Research at Mehta Equities, are bearish on the counter and expect it to list at a discount given the current market turmoil.

"SBI Card would be the first victim of the coronavirus pandemic. We do not expect any big listing gains, rather one may see it opening a at a 10-15 percent discount," Prashanth Tapse said.

 

But despite what happens on March 16, Gaurav Garg,

Head of Research at CapitalVia Global Research, feels long-term investors can continue to look at the counter given its strong fundamentals.

Disclaimer: The views and investment tips expressed by investment expert on moneycontrol.com are his own and not that of the website or its management. Moneycontrol.com advises users to check with certified experts before taking any investment decisions.

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First Published on Mar 14, 2020 12:27 pm
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